Federal Small Business Stimulus: What Your Business Can Do Now

If you’re a small business owner struggling through the coronavirus outbreak and the havoc it is wreaking on your business, let me first say this: I am sorry. You have worked hard, put your heart and soul and savings into your business, put in long hours and did the right thing every step of the way. Now you’re facing a challenge no one saw coming.

I know exactly what you’re going through. My husband has been running his business his entire adult life. He’s been through recessions and down-turns. Frozen-solid winters when there was no work, and sweltering summers when there was too much. He’s had plenty of customers who didn’t pay their bills and his fair share of employees who stopped showing up — or, worse yet, showed up drunk and spent the day sleeping in their truck. He’s had good years and bad years and years where he didn’t take a paycheck so he could pay his employees instead.

And, yet, here we find ourselves wide awake at 3 a.m. trying to decide whether to pay his employees to stay home or lay them off in hopes of saving the business so they have a job to come back to. I’m sure you’re also making plenty of decisions at 3 a.m.

The good news is that legislation passed in Washington offers a lot of help for struggling small businesses. I’ll try to break it down for you here. 

First, let’s acknowledge that this isn’t going to be easy. Filling out forms, navigating complicated requirements and providing documentation is going to take time and will probably be filled with lots of frustrating moments. But this is your job right now. If you apply the same tenacity, commitment and, yes, patience that you regularly bring to your business, you’ll be able to take advantage of the assistance available from the government. 

The first thing you need to know is that there are essentially three federal aid programs that have been approved. We break them down for you in this article, but the key components are:

• A $10,000 emergency grant
• SBA-backed loans/grants to cover expenses. 
• SBA disaster loans.
• Paid leave for employees.
• Tax credits for paying employees.

(Before reading any further, please note that a number of SBA scam sites have already popped up. Be sure you are on the site: SBA.gov before clicking any links or entering any information.)

Here’s what each means to you:

Payroll Protection Program: The CARES Act, which has now been signed into law, contains a program called the Paycheck Protection Program. This program will allow you to take out an government-backed loan from a private bank. Provided you use the money to pay your employees, your mortgage and a variety of other approved expenses, the loan will be converted into a grant and you won’t have to pay it back. The one catch is you have to continue to employ your workers or rehire them when you’re back up and running. Once the law is signed you can contact your bank for information on how to apply. Expect it might take a week or two for them to get their program up and running.

There are specifics in the law that you need to be aware of – such as how long you have to use the money, what it can be used for and caps on payroll, so be sure to understand the terms of the loan before you agree. You can read more about the paycheck protection program here.

Another feature of the CARES Act is a $10,000 emergency grant available from the SBA that is expected to be paid out within three days of application. You do not have to pay this grant back even if you do not qualify for any of the other loans. This $10,000 grant is available as part of the disaster loan application process. You will be given the opportunity to ask for this emergency grant. Read below on how to apply for a disaster loan.

SBA Disaster Loans: Normally, disaster loans are used to help businesses who are suffering from natural disasters like a hurricane or earthquake. However, the SBA is now considering the coronavirus a disaster and allowing businesses to apply for these loans. You can do that here.

If you decide to apply for one of these loans but are struggling to work through the paperwork, two organizations are offering assistance with that. SCORE is making its business mentors available to help remotely. You can find one here. Local Small Business Development Centers are also offering remote assistance. You can find one near you here. 

One thing to be sure you do — whichever loan you apply for — is keep very careful track of your documentation. You will need later to prove your losses and how you spend any loan money. Learn more about SBA Disaster Assistance Loans.

Family First Coronavirus Response Act: Another issue that many of you have probably heard about is the Family First Coronavirus Response Act. A key part of that law requires small businesses to pay their employees if they have to miss work for coronavirus related reasons. This may seem a little scary, considering you may be struggling to pay even your regular monthly bills, let alone your payroll, but there is good news.

First, small businesses (with fewer than 50 employees) are expected to be exempt from portions of this law particularly if it threatens the viability of your business. Second, the government is going to give you tax credits to help cover the costs. Again, be sure you keep careful records of your payroll and exactly who you are paying for what amount of time working or not working. You will need to document this later. You can read more about the FFCRA here to understand your obligations and how to apply for relief. 

Those are the key federal resources available to you right now. But there are also lots of other assistance programs on the state level and even from private organizations. You can find a list of them here. Forbes has also put together a good list of resources. Inc. has also have compiled a thorough list of resources for businesses.

If you need more help, check out our Small Business Coronavirus Guide. We’ve got dozens of articles to help get you through this. So get busy and stay strong. We’ll get through this together.

Up next...some creative ideas for how to encourage your customers to support you through this tough time.